How to Make Business Model Innovation Happen
One of many good reasons for you to focus on your business model is that companies focusing on Business Model Innovation outperform their industry peers in terms of operating margin and total shareholder return. In this in depth article Marc Sniukas provides you with a framework to describe your business model in three easy steps; a process to start and drive Business Model Innovation within your company and an overview of tools and how they can be used in Business Model Innovation.
Business Model Innovation is about transforming key elements of your business or inventing completely new ways of doing business. A first key element is to describe your actual business model along the three main questions of who your customer is, what are you offering and how are you doing this. To drive Business Model Innovation in established companies you will need a clear process, with clear tasks and a dedicated team driving the efforts. Tools can help, but they are not enough. The process and the allocation of resources are crucial. This manual will outline key questions to describe your business model and show how a five step process of setting the stage, discovery, development, conceptualization and commercialization can be used to drive Business Model Innovation within your organization.
Why business model innovation matters
While the concept of “business model” has emerged during the new economy boom of the mid-1990s (e.g. Demil and Lecocq 2010; Leavy 2010; Magretta 2002; McGrath 2010; Teece 2010; Zott et al. 2010), it has since evolved past its original domain of e-commerce to become a central element of many companies’ strategies.
Here are some examples on why business model innovation matters:
- Companies focusing on Business Model Innovation outperform their industry peers in terms of operating margin and Total Shareholder Return.
- Business Model Innovation is the main driver of competitive advantage of companies like Southwest Airlines, Amazon, ArcelorMittal, or Apple;
- New business models have been key to commercializing many new technologies;
- Depending of the life cycle of your product, Business Model Innovation might be the only hope you have.
This is what you can expect from this guide
Despite the importance of Business Model Innovation, and the obvious benefits to be gained from it, established companies still struggle to make it happen. This IM in-depth article will provide you with:
- A framework to describe your business model in three easy steps;
- A process to start and drive Business Model Innovation within your company;
- An overview of tools and how they can be used in Business Model Innovation;
- Practical advice on how to get started on a low scale.
About the author
Marc Sniukas is a principal at Doujak Corporate Development, where he consults to executive teams on issues of strategy, innovation, strategic renewal and organizational transformation across a wide range of industries. He has worked with major corporations in Europe, the US, Canada, Latin America, Saudi Arabia, the UAE, Turkey, China and South Africa.
Besides his corporate work, he has also run courses at leading business schools including Stanford’s Graduate School of Business, the Boston University School of Management, and the European Business School London and he is currently researching Business Model Innovation as part of Manchester Business School’s doctoral program. His mission is to help organizations make strategic innovation for growth and renewal happen.